The California Supreme Court today struck down a special fee on Santa Clara County homeowners used to pay for open space acquisition, possibly wiping out more than $50 million collected over the past seven years for parks, trails and other services.

In a unanimous ruling, the justices found that the 2001 special assessment by the county’s Open Space Authority violated Proposition 218, a 12-year-old voter-approved law known as the “Right to Vote on Taxes Act.” Proposition 218 was designed to limit local governments’ ability to raise revenue without voter approval.

The Supreme Court’s decision is expected to make it tougher for cash-strapped local governments to raise money through special assessments, in many instances forcing agencies to seek that money from voters who must approve any new taxes by a two-thirds majority.

The Supreme Court sided with the Silicon Valley Taxpayers Association, which sued to block the property assessment, arguing that it amounted to a tax that should be approved by all county voters. The Open Space Authority established the property assessment in 2001 to pay for open space from Milpitas to Morgan Hill.

With the case tied up in the courts, open space officials had set aside roughly $56 million to preserve open space, as well as pay for other services such as pest control and street improvements. Open space executives said this spring that they would likely refund the money to homeowners if they lost in the state Supreme Court.

Patrick Congdon, general manager for the authority, said it is premature to say what will become of the money, although he acknowledged that it may have to be returned. Congdon expressed disappointment in the ruling, saying it will severely hamper the agency’s ability to buy new open space.

“It pretty much puts near-future acquisitions in a state of limbo,” he said. “The funds aren’t available.”

The Supreme Court ruling, written by Justice Ming Chin, overturned a San Jose appeals court, which sided with the Open Space Authority in 2005. The Supreme Court concluded that the open space district failed to specify how the special assessment funding would be used, and how it would benefit the individual homeowners hit with the fee increase, thus violating the spirit of Proposition 218.

The Supreme Court’s ruling effectively will require local agencies to put such assessments before the voters, unless a fee hike is well-defined for a particular set of homeowners, such as to fund lighting or street improvements in a neighborhood. The ruling will make it tougher for cities and counties because some of these fee increases will require a two-thirds vote at the ballot box, a much tougher hurdle than creating special assessment districts.

The Santa Clara County open space case has been closely watched by local governments across the state, which rely on a variety of special assessments to pay for services. The ruling could further jeopardize fees such as San Jose’s phone fee for 911 costs, an assessment already up in the air because of recent court rulings. Santa Clara County had also been contemplating such a 911 fee.

“My initial reading of it is that it is fairly broad,” said Santa Clara County Counsel Ann Ravel. “It will be problematic for cities and counties to impose any kind of assessments that do other than provide a benefit to individual homeowners.”

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